GBP/USD stays neutral, door open for a test of 1.3764 – UOB

In opinion of FX Strategists at UOB Group, Cable keeps the neutral bias and a test of the vicinity of 1.3760 is not ruled out.

Key Quotes

24-hour view: “GBP traded in a choppy manner yesterday, swinging from a low of 1.3905 to 1.4008 before plummeting back down to the current level of 1.3915. While downward momentum remains patchy, the undertone has weakened and a break below the overnight low of 1.3905 low could lead to further weakness towards 1.3860 (next support is some distance away at 1.3800). Resistance is at 1.3955 followed by 1.3985. The 1.4008 high is not expected to come into the picture for now”.

Next 1-3 weeks: “we were of the view that the consolidation phase “could last for last for a while more”. The sharp drop yesterday that cracked the bottom of the expected 1.3920/1.4200 consolidation phase came as a surprise and has shifted the immediate pressure to the downside. In other words, the outlook for GBP has turned negative and this could lead to further weakness towards the 1.3764 low seen earlier this month. Only a move back above 1.4020 would indicate that the immediate downward pressure has eased”.